Casual Dining Group views overseas franchises as “significant” income stream

The Casual Dining Group has reiterated its plans to drive more revenue from international franchise operations in its financial report for the 2016/17 year.

CDG, which owns Bella Italia, Cafe Rouge and Las Iguanas, stated in its accounts that it has looked to lay the foundations for long-term sustainable growth while developing its overseas franchise platform and ensuring continued brand development and innovation.

Bosses at the firm said they have invested “significantly” in getting the franchise operations off the ground and expect it to provide the group with significant new income stream going forward.

“The group’s international franchise strategy has shown strong momentum with a large number of development agreements already in place across the Middle East and South Africa, which will generate income for the group in the new financial period,” it said.

Recently the group revealed that 83 agreements had been signed with international franchisees, principally in the Middle East, Ireland and South Africa.

17 international openings are planned for the 2018 calendar year, with the regions above, plus Gibraltar, earmarked for projects.

The focus on sales outside of the UK comes as the company admitted in the report that it had encountered a “difficult trading environment” for the casual dining market.

It described cost pressures from wages and property as “significant” and said it had been exposed to the devaluation of sterling. “This has led to price increases to the consumer across the market and subsequently high levels of discounting and promotions as covers have fallen,” it stated.

CDG grew sales by 10% to £329m for the year to 28 May 2017, operating 280 restaurants at the end of the period. It recorded an operating loss of £10.8m.